By: Joan Reed Wilson, Esq.
Clients are often unpleasantly surprised to learn that having a Last Will and Testament does not negate the need for probate. And they are sometimes annoyed when they learn that even though they are named as the Executor in a Will, that alone does not give them authority to access the decedent’s assets. Yet both of these statements are true.
The Probate Courts have jurisdiction to oversee the disposition of certain assets owned by a decedent. The assets under Probate Court jurisdiction include any asset owned by the decedent in his or her name individually that does not have a beneficiary designation. Assets that the decedent owned jointly with another person pass automatically to that joint owner and do not pass through the decedent’s Will or require probate court involvement. If the decedent completed paperwork, typically directly with the financial institution, to name a beneficiary or POD (“payable on death”) or TOD (“transfer on death”), that asset passes directly to the named beneficiary without the Will or probate court involvement. Assets that most commonly include beneficiary designations are life insurance and retirement accounts, such as IRA’s and 401(k)’s. All other assets, including individually owned real property, bank accounts and life insurance policies or retirement accounts that have no valid beneficiary designation, require probate court involvement, whether there is a Will or not.
A Last Will and Testament provides the Court with the decedent’s wishes with respect to the disposition of the assets and nominates who should be in charge of taking care of the estate (i.e., the Executor). Without a Will, the decedent’s assets will pass under a hierarchy of relatives, including spouse, children, parents and siblings. While the Will allows the decedent to specify a different outcome, the distribution still requires Probate Court oversight. The first step is submitting the original Will to the Court with a Petition. After all potential heirs are notified of the filing, the Court will make a determination on appointing the nominated executor. After someone is appointed as Executor, he or she can access the decedent’s accounts, pay bills and begin preparations for filing the paperwork with the Probate Court for the proposed distribution as set forth in the Will.
The only way to avoid Probate Court involvement is to remove all assets from your individual name. Putting a joint owner on all assets can be risky because the joint owner’s creditors could put a claim on the asset. Moreover, the joint owner is often not the only intended beneficiary, but when the asset automatically passes to that joint owner after the decedent’s death, it does not pass to the decedent’s other beneficiaries. The less risky way to remove assets from your individual name is to prepare a Revocable Trust and transfer the assets into the Trust.
Avoiding probate is not necessary or advisable for everyone. It is important to meet with an estate planning attorney who seeks to understand your goals and concerns to recommend a plan that fits your needs and not turn to a cookie cutter document that cannot analyze all of the moving parts.
If after reviewing your goal and concerns, you determine that a Will is the right plan for you (you might determine that having a Judge oversee your estate and make sure the right people receive the right distributions is not necessarily a bad thing), at least you will know that Probate Court involvement is required and hopefully you can provide guidance to your loved ones on that steps they will need to take after your passing.